Lubuntu 11.10 (Oneiric Ocelot) is a brand-new flavor of Ubuntu based on Lightweight X11 Desktop Environment (LXDE) as its default graphical user interface. The goal is to provide a very lightweight distribution, with all the advantages of the Ubuntu world (repositories, support).
Lubuntu is targeted at 'normal' PC and laptop users running on low-specification hardware. With many LXDE components, Lubuntu also uses well-known applications, such as Chromium, Openbox and Pidgin, to name a few. Features: PCManFM 0.9.9, a fast and lightweight file manager using GIO/GVFS; LXDE, a lightweight GTK+ display manager; Chromium, the open-source variant of Google Chrome; based on Ubuntu 11.10.
More info can be found here
A Pentium II or Celeron system with 128 MB of RAM is probably a bottom-line configuration that may yield slow yet usable system with Lubuntu. It should be possible to install and run Lubuntu with less memory, but the result will likely not be suitable for practical use.